"The exacting requirements for fragment size control in next-generation sequencing (NGS) are best addressed with Caliper's patented microfluidics
technology, while the scale of the opportunity created an opportunity for outsourced manufacturing and the transition from glass to plastic chip format,"
says Kevin Hrusovsky, president and CEO of Caliper. "We selected Sony DADC, the world's largest producer of super high-quality Blu-ray discs, because of
their outstanding quality and large-volume manufacturing credentials."

Hrusovsky claims that NGS is "the fastest growing industry in the
world," eclipsing Moore's Law by five times in the past 24 months. Caliper's LabChip XT system, an automated nucleic acid fractionation instrument for
next-generation sequencing applications, removes a key bottleneck in sequencing workflows by replacing tedious gel isolation and purification steps used in
size selection. The plastic chips manufactured by Sony DADC allow Caliper to offer a cost-effective and disposable consumable that eliminates cross-
contamination potential, which is a key concern for genomics researchers.

The LabChip XT instrument uses microfluidic electrophoresis to
separate up to four DNA samples simultaneously. A sample travels down a channel where it is separated and analyzed. At the end of the channel a current
switch is used to drive the desired fragments into a collection well. Other fragments are dumped into a waste well. The desired sample is collected and is
ready for PCR enrichment prior to going onto the sequencer.

"The XT significantly reduces the time required to build DNA libraries," says
Hrusovsky. "The manual technique can take six days to build one library, and we can do four in 30 minutes on the same chip. The cost is lower and
contamination is eliminated, lane-to-lane and run-to-run."

The technology combines the electrode with the chip so electrodes are not re-
used, which can be a source of contamination.

In an unusually frank discussion of the system's commercial potential, Hrusovsky says he
expects to have one LabChip XT in place for every two sequencers, or about 2,000 units by the end of 2012. He predicts that about 100 of the disposable
Sony-made chips will be used annually by each XT.

Caliper is also aggressively innovating new technology to bridge the gap between in
vitro assays and in vivo results and then translating those results into cures for human disease, Hrusovsky adds.

"One
of the best ways to do this is through imaging, both pathology (isolated tissue) as well as whole body imaging," he says. "The fact that you can use the
same molecular biomarkers, both in vivo and in vitro, and test different samples from the same patient (e.g., tissue by in vivo
diagnostics and blood by in vitro diagnostics) is very compelling. Furthermore, it is based on good science since you are minimizing the
number of variables between the in vitro condition versus the in vivo condition, which makes an 'apples to apples' comparison more
credible."

The technique uses molecular probes that light up to identify cancer cells, for example. When Caliper acquired Xenogen and its
CCD camera imaging technology in 2006, there were about 400 cameras in use; there will be about 1,000 by year's end. Currently, revenue generated by the
sale of units and licensing patents to users totals about $60 million/year, Hrusovsky says. Caliper systems are in use at Merck, Novartis, Pfizer, Amgen, Bristol-Myers Squibb, Johnson & Johnson and elsewhere.